Step 4: Price the Home

Step 4: Price the Home

Arguably the most important component of any home sale is determining the appropriate listing price of the home. Finding an accurate and competitive price point for the home will help to facilitate a profitable “For Sale By Owner” (FSBO) sales process. Conversely, pricing a home too high can scare off prospective purchasers and cause the home to idle for a lengthy period of time. Moreover, the longer a home idles on the market without receiving a contract, the more leverage prospective buyers have in negotiating a lower purchase price. The first two or three weeks after listing a home for sale are extremely important in capturing the attention of prospective buyers and real estate agents. Accordingly, determining a home’s fair market value through a comparative market analysis is crucial to selling a home quickly at a price that is acceptable to the seller.

There are many resources that are free of charge to assist FSBO sellers in conducting a comparative market analysis. Nestseller highly recommends that sellers consider each of the following items in determining the fair market value of a home:

Consider interviewing real estate agents who may have the best sense of a local housing market.

Consider hiring an appraiser. A professional assessment by an appraiser provides sellers a current analysis of a home’s value and will provide the most accurate representation of a home’s fair market value. Hiring an appraiser typically costs between $300 and $500.

Once the fair market value of a home is determined, sellers should consider several additional factors that may impact the asking price of the home:

Some buyers search for homes listed only in certain price ranges. For example, if the target sales price is $203,000, a seller should consider listing the home at $199,999 in order to capture prospective buyers who may be searching in the $150,000 to $200,000 range and who otherwise would not come across a listing at $203,000.

Price a home so that it stands out from other homes in the neighborhood. For example, if there are multiple homes listed around the $185,000 price range and another set of homes that are listed starting at $205,000, your home might be situated perfectly to take advantage of the $190,000 to $200,000 price range.

Price a home to take advantage of the savings realized by not having to pay commission to one or more real estate agents. A home priced slightly lower than the asking prices of comparable non-FSBO homes often can be a winning strategy.

The time of year when people are most likely to be looking for a home may impact the number of offers received.

The availability of low interest rates may impact the number of prospective buyers.

The inventory of comparable homes nearby can impact the demand for homes of a particular type.

Whether the current state of the local real estate market tends to favor buyers (there are more houses for sale than buyers), sellers (there are more buyers than available homes), or remains balanced.